What Is The Financial Exploitation Prevention Act Of Michigan?

Financial exploitation of vulnerable adults has always been a problem, in Michigan and elsewhere. Older adults may have considerable savings, and may be frail, isolated, or lonely, making them easy prey for the unscrupulous. In recent decades, the internet and other rapidly-advancing technology has made it even easier for con artists to take advantage of seniors.

Elder financial exploitation can take many forms, from theft by a caretaker to embezzlement by guardians to a variety of phone and internet scams. Fortunately, Michigan has taken steps to protect seniors and other vulnerable adults from some prevalent forms of financial abuse.

A collaborative effort spearheaded by the Michigan Department of Attorney General’s Elder Abuse Task Force led to the development of the Financial Exploitation Prevention Act (FEPA). The Task Force is composed of over 50 public, private, and nonprofit organizations in Michigan. FEPA was signed into law on December 30, 2020, and took effect in September 2021.

What is Financial Exploitation?

FEPA defines “financial exploitation” as either “a fraudulent or otherwise illegal, unauthorized, or improper act or promise of an individual who uses or attempts to use the financial resources of another individual for monetary or personal benefit, profit, or gain,” or “a fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual that results or is intended to result in depriving another individual of rightful access to or use of benefits, resources, belongings, or assets.”

In practice, financial exploitation might look like a younger relative writing checks from an older relative’s checkbook for their own benefit, forging the older relative’s signature. Financial exploitation could also involve using an older relative’s ATM card and code without their authorization and using their money for one’s own purposes; pressuring the older person for loans or to pay someone else’s bills; intercepting and cashing the senior’s benefit check; or using the access provided by a power of attorney to gain access to the senior’s funds.

Provisions of the Financial Exploitation Prevention Act

Because much financial abuse of elders involves transactions through banks and other financial institutions, it makes sense to give those institutions training and tools to identify and report potential exploitation.

The Financial Exploitation Prevention Act both empowers and protects financial institutions in efforts to safeguard the vulnerable. FEPA requires financial institutions to develop and put in place policies, training, and procedures to identify financial exploitation and report it to a law enforcement agency or Adult Protective Services. Institutions need to instruct employees regarding common types of financial exploitation, signs of potential exploitation, federal advisory guidance, and what to do when financial exploitation is detected or suspected.

Policy regarding whether a report of potential exploitation is warranted must take into consideration the safety of employees and the customer who is the potential target of exploitation, as well as the need to preserve the customer’s funds or other assets. In addition, the law gives financial institutions, under certain circumstances, the ability to freeze customer assets or transactions under certain circumstances so that they can investigate further.

Within 10 business days after receiving a report of suspected or detected financial exploitation, the law enforcement or adult protective services agency must report in writing to the financial institution whether the matter is being investigated or referred to a law enforcement agency for investigation. Within 10 days of receiving a report, a law enforcement or adult protective services agency must notify the office of the county prosecutor. As soon as reasonably possible after an investigation, the agency must advise the financial institution of the disposition of the reported incident.

FEPA also includes measures to protect the identity of an individual or institution that reports suspected or detected financial exploitation of elders. Similar measures are in place to protect the identity and personal information of the suspected or confirmed victim of exploitation.

The new law also protects financial institutions and their officers, directors, agents and employees from being sued by a private party for an act or omission in good faith under FEPA, and from criminal or administrative liability.

FEPA does not require financial institutions or their employees to have rock-solid proof of exploitation before making a report to an authorized agency. But by requiring financial institutions to educate their employees about recognizing financial exploitation, and protecting them if they make a good-faith report of suspected exploitation, the new law helps to protect seniors.

If you have questions about the financial exploitation of vulnerable adults, or elder law in general, we invite you to contact our law office to schedule a consultation.